Queensland's auditor-general Andrew Greaves has released a damning assessment of the way gambling taxes are distributed to the state's community groups.

Mr Greaves examined Queensland's four gambling community benefit funds, which distribute $50 million a year to not-for-profit organisations.

He found the grant process was inefficient and ineffective and administration was poor.

"So poor the funds paid 42 groups twice - giving more than half-a-million-dollars in duplicate payments over two years, and relying on the community groups to pay it back, or apply to use the money for another purpose," he said.

The funds are administered by the Office of Liquor and Gaming Regulation, which is part of the Attorney-General's department.

An audit in 2009 found similar problems with their administration, but these have still have not been addressed.